According to a survey, an above-average number of retailers and innkeepers want to raise their prices in the coming months. The barometer for price expectations in the German economy as a whole fell to 14.7 points in August from 16.3 in July, as the Munich Ifo Institute reported in its monthly company survey. In the case of retailers, however, the value only fell from 34.9 to 33.5 points, in gastronomy from 47.8 to 46.6 points and in the trade in food and beverages from 55.3 to 55.1 points.
Hotels and restaurants in Germany are also again criticizing the expiry of tax breaks at the beginning of 2024. “The existential fears in the industry are still high,” said President Guido Zöllick of the Dehoga industry association in Berlin. “At 45.5 percent, almost half of our companies expect business to be worse than before in the next three months.” Against the background of falling guest numbers and rising costs at the same time, 28 percent of the companies feared that they would even make losses in 2023. Because of the massive increase in costs, Zöllick again appealed to politicians that the value added tax, which had been reduced to seven percent, should not be increased again to 19 percent in 2024. “This leads to a price shock for the guests.”
The German Hotel and Restaurant Association (Dehoga) has been calling for a long time to keep the VAT on food in the catering trade, which was reduced during the corona and energy crisis, permanently low. After several extensions, the tax rate is to rise again from seven to the original 19 percent in January 2024. However, the companies would have to pass this on to the guests in full, as well as other costs, “since the restaurateurs no longer have any leeway and reserves,” warned Zöllick. In the first half of the year, sales – adjusted for rising prices – fell by 10.4 percent in real terms compared to the pre-crisis level of 2019. On the other hand, nominal revenues were almost ten percent higher due to inflation.
According to Dehoga, the industry lost 36,000 companies in 2020 and 2021 alone. Next year, when the tax relief expires, 12,000 other companies are threatened, said Dehoga in a survey of around 6,500 companies. According to the companies surveyed, the prices for food were on average 25.3 percent higher than in August 2022, for beverages 18.1 percent and for energy products 41.3 percent. Personnel costs also increased by 21.0 percent.
“But the decline in inflation will be tough,” said Ifo economic chief Timo Wollmershäuser. The inflation rate fell from 6.2 to 6.1 percent in August. Stronger increases in energy prices prevented a sharper decline. The rise in prices in industry has “probably almost stopped,” says Wollmershäuser. However, there are opposing developments: car manufacturers are still planning to raise their prices (plus 21.6 points), while paper manufacturers want to lower them (minus 48.1).
The service providers also want to ask for more money: However, the price expectations have continued to decline and have fallen from 27.0 to 23.7 points. “There are a few more price cuts in construction,” it said: Here the barometer fell from minus 8.3 to minus 10.0 points. The points indicate what percentage of the companies want to increase their prices on balance. This balance is obtained by subtracting the percentage of companies wanting to charge more from the percentage of companies wanting to lower their prices.